It has always been hard to take Jonathon Cohn seriously, but this one takes the cake. However, I take some heart from this essay- he now seems to understand what is coming, and is attempting to shift the blame. That is actually progress, in my humble opinion. Previously, he would have been claiming that such narrow networks weren’t going to be a feature of the exchange policies.

“With Obamacare, and its requirement of selling policies to anybody willing to buy them, insurers also worry about adverse selection. Previously, they were willing to offer plans without provider restrictions, but only to people unlikely to use either outpatient or inpatient services much. Now insurers have to sell plans to anybody, regardless of pre-existing conditions or risk of illness. In other words, they can’t restrict wide-open access to the people least likely to use it.”

On the Businessweek article- this is exactly how I expected it to be. The people for whom health insurance is financially the most beneficial are going to the unhealthiest, but they will pool at the ends of income distribution- either young/old and poor, or older and wealthier. The former will be likely to end up on Medicaid, and the latter won’t be eligible for a subsidy. Everybody else in between will find even the cheapest policies a very poor deal- you pay premiums for things you are likely to never use. This result, if it holds is a death knell for viability.

States push back against the narrow-network race to the bottom; some are considering “any willing provider” laws.

I’m in favor of allowing insurers and health plans to experiment with narrow networks. It’s far too early for people to bash the concept. Telling enrollees they can only see a handful of doctors (that are always booked up) is a far cry from negotiating an exclusive deal with a few hospitals that will provide package prices and guarantee results. Policymakers need to be careful they don’t play into the hands of providers who want to be protected against competition.

You really don’t have a choice but to allow it. However, here is the thing that is going to bite- we already know Americans don’t like this- such things have a longer history in the US than just ACA. Even worse now, though, is that not all the policies listed on the exchanges can even tell you what the networks are. Almost like a black box.

If health insurers cannot turn anyone down, they still must find some way to discourage high-cost persons from enrolling in their plans.

A narrow network serves this function. Anyone who even cares what doctors or hospitals are in a plan either has an existing condition, or has a family member who has had one.

Just keeping away a few of these persons can make the difference between profit and loss.

The ACA did in fact cause this trend, with its typical thoughtlessness.

Point #2

If an academic hospital will not negotiate fees with an insurer, and the insurer then excludes them, this I would not blame on Obamacare.

In the free market that this blog is always advocating, consumers would have a choice between an expensive policy that includes expensive providers, vs. a cheap policy that includes cheaper providers.

This happens all the time with car insurance and no one even notices it. That is because unless you own a Jaguar, a windshield or a bumper can be fixed by anyone.

In health care, we are haunted by the dilemma that Clark Havighurst writes about — i.e. that a person chooses a cheap policy but then gets a form of cancer
that can only be treated by an expensive provider.